Presumed Guilty: Financial Watchdogs See Crypto as Illicit by Default

Published on

Feb 26, 2020

by Cointele | Published on

Coinage

Recently, financial regulators around the world have been growing concerned about the role of cryptocurrency in money laundering and financing of various illicit activities.

The first two months of 2020 saw many governments acting on these concerns and introducing a variety of legal measures designed to bolster their defenses against financial cybercrime allegedly facilitated by the use of digital money.

Russia has become the latest of the major jurisdictions to make a move in this direction, as the Central Bank of Russia unveiled last week a revised set of indicators by which financial institutions are advised to recognize suspicious transactions potentially related to money laundering.

Is making such blanket presumptions of guilt now guiding the new wave of restrictive measures that financial authorities are readying to put up?

The list of around 100 items is not exhaustive, as there is room for financial institutions to include new ones specific to their particular circumstances.

The FATF tideWhile Russian authorities' newly codified suspicion of all crypto transactions does not necessarily translate into increased oversight by financial watchdogs, many similar measures recently enacted or announced by other governments do.

The impetus for nations, from Ukraine to Japan, to concurrently enact new crypto-focused AML rules comes from the Financial Action Task Force guidance issued in the summer of 2019.

In addition to calling digital currencies a source of fiscal risk, the document mentioned money laundering as a substantial threat associated with crypto.

Hawkish signals from across the AtlanticBeyond the enforcement of FATF standards, the sheer attitudes of influential global players toward policing the cryptocurrency space can have a significant effect on policy, by both setting precedent domestically and shaping the mainstream opinions within international financial organizations.

"We will judge emerging financial institutions on whether and how they make their systems resilient to, and report on, money laundering, terrorist financing, sanctions evasion, human and narco-trafficking, and other illicit activity."